Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Citigroup Power, Gas and Utilities Conference 2006
39 slides from Public Service Enterprise's conference presentation, Mar 3, 2006
Slide 1: Citigroup Power, Gas and Utilities Conference
Citigroup Power, Gas and Utilities Conference Miami, Florida March 2-3, 2006 Exelon Corporation Public Service Enterprise Group
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results of Exelon Corporation (Exelon), Commonwealth Edison Co
Slide 3: Agenda
Key Messages Exelon Overview PSEG Overview EEG Merger Overview Additional Information Agenda
Slide 4: Key Messages
Continued strong stand-alone performance at both Exelon and PSEG Value-added, operationally-driven merger Progressing towards close in second or third quarter 2006 Uniquely positioned generation business Large, low-cost, low-emissions, exceptionally well-run nuclear fleet Upside from end of below-ma
Slide 5: Exelon Overview
Exelon Overview Exelon. 7
Slide 6: What Is Exelon?
(1) Includes long-term contracts Note: Data based on results reported through 2/14/06 Sources: Company reports What Is Exelon?
Slide 7: Exelon Overview
Exelon Overview (1) At 12/31/05; includes long-term contracts and investments in two facilities in Mexico of 230 MWs Note: See presentation appendix for adjusted (non-GAAP) operating reconciliations to GAAP Pennsylvania Utility Illinois Utility Nuclear Generation Fossil Generation Power Marketing Nu
Slide 8: Our Regional Positions
11,300 MW 5,291 MW 16,591 MW 8,772 MW Midwest Owned Generation: Contracted Gen: Total Generation: ComEd PPA Avg Load: 2,299 MW 2,900 MW 5,199 MW ERCOT/South Owned Generation: Contracted Gen: Total Generation: 10,958 MW 4,414 MW Mid-Atlantic Owned Generation:: PECO PPA Avg Load: 25,099 MW 8,191 MW 33
Slide 9: Looking Back: 2000 - 2005
Looking Back: 2000 - 2005 Exelon had 9.9% average annual operating earnings per share growth driven by: PECO / Unicom merger Improved operations Core growth in retail delivery volumes Effective commodity risk management Cost management initiatives Debt reduction and refinancings Despite: Retail rate
Slide 10: Exelon's EPS Drivers: 2004 - 2007
2004A 2005A 2006 Estimate 2007 East 2.78 3.09 3 0.24 $2.78 $3.10 $3.00-$3.30 + Generation Margins + Weather + Load Growth - - Other Exelon's EPS Drivers: 2004 - 2007 + Generation Margins + Load Growth - - Weather - - Higher O&M + End of Illinois Transition Period + PECO Generation Rate + Load Growth
Slide 11: End of Illinois Transition Period
ComEd becomes a pure wires business Returns determined through traditional regulatory processes Received Illinois Commerce Commission (ICC) approval of reverse auction with energy cost pass through - - Rate increase expected on delivery services tariff (DST) Exelon Generation gets a market price for
Slide 12: Composition of Operating Earnings
2002 2003 2004 2005 2006E 2007E Generation 0.24 0.3 0.33 0.5 0.52 0.73 ComEd 0.47 0.45 0.42 0.25 0.26 0.12 PECO 0.29 0.25 0.25 0.25 0.22 0.15 A further shift in relative earnings contribution from Energy Delivery to Generation will occur in 2007 when ComEd becomes a pure wires company and Generation
Slide 13: PSEG Overview
PSEG Overview Exelon. 7%
Slide 14: PSEG Overview
PSEG Overview Electric Customers: 2.1M Gas Customers: 1.7M Nuclear Capacity: 3,494 MW Total Capacity: 14,549 MW Traditional T&D Leveraged Leases 2006E Operating Earnings(1): $875M - $950M 2006 EPS Guidance: $3.45 - $3.75 Assets (as of 12/31/05): $ 29.8B Domestic/Int'l Energy Regional Wholesale Energ
Slide 15: PSEG Stand-Alone 2006 Earnings Guidance
2005 Actual Markets Operations New Assets Leases Other 2006 Guidance 2007 2008 West 890 890 1049 1010 966 914 0 0 0 Seminole 159 48 87 33 17 918 1000 1100 NDT 35 Weather Driven by Power Recontracting at Higher Commodity Prices $3.45 to $3.75 $3.65 PSEG Stand-Alone 2006 Earnings Guidance More than 10
Slide 16: 2006 Key Events
2006 Key Events Natural Gas Price Impact Longer-term Benefits Liquidity Customer Impact Dampened - BGS: 3-year contracts - BGSS: storage and hedges Balance Sheet Liquidity - $2.7B as of 12/31/05 Regulatory Gas Rate Case - $133M increase requested - $55M Depreciation - $1.96B Utility Rate Base - 11%
Slide 17: BGS Auction Structure
20,000 4,000 8,000 12,000 16,000 2002 2003 2004 2005 2006 2007 2008 1 Year 170 Traunches 10 months 104 Traunches 34 months 51 Tranches 1 Year 50 Traunches 3 Years 51 Traunches 2006 FP Auction Load 54 Traunches 2005 FP Auction Load 50 Traunches 2007 FP Auction Load (projected) Total NJ BGS FP Load (M
Slide 18: BGS Auction Results
BGS Auction Results 2003 Auction 2004 Auction 2005 Auction 2006 Auction East 34 37 45.14 67.7 West 21.59 18.05 20.77 34.51 $33 - $34 $36 - $37 $55.59 (34 Month NJ Avg.) $55.05 (36 Month NJ Avg.) $65.91 (36 Month NJ Avg.) $44 - $46 Transmission Ancillary services Load shape Congestion Risk premium Ca
Slide 19: EEG Merger Overview
EEG Merger Overview Generation PEG: EXC: (MWs) Exelon PSEG EEG U.S. Rank Nuclear 16,751 3,484 20,235 1 TOTAL MW's (1) 34,457 17,018 51,475 1 Elec. Customers 5,200,000 2,100,000 7,300,000 1 Gas Customers 460,000 1,700,000 2,160,000 7 (1) Year-end 2004; Generation numbers include long-term contracts.
Slide 20: A "Win-Win" Combination
A "Win-Win"Combination Combined Company Enhanced earnings Regulatory and market diversity Increased operating flexibility Strong, stable cash flow with commitment to solid investment grade ratings Experienced management team PSEG Brings Excellence in transmission and distribution operations Expertis
Slide 21: $500 Million of Synergies Beyond Year 1
Corporate, Business Services 0.28 Trading 0.13 Fossil 0.1 Nuclear 0.29 Nuclear Production 0.2 20% ~$70m 29% ~$100m 28% ~$100m Trading Genco Corp/ Fossil Corporate, Business Services Nuclear Production Improvements Corp/BSC 0.63 Utility 0.37 43% ~$65m T&D Operations 57% ~$85m Corporate, Business Serv
Slide 22: Merger Regulatory Update
Merger Regulatory Update Status of major filings/approvals: FERC order approving merger without hearing issued 7/1/05 FERC approved the application as proposed with no surprises New merger review provisions in Energy Policy Act of 2005 do not apply Department of Justice Hart-Scott-Rodino review The
Slide 23: Anticipated Merger Timeline
Dec 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Announce Transaction 12/20/04 Shareholder Approvals 7/05 FERC, NJBPU, PAPUC, ICC Regulatory Filings 2/4/05 File Joint Proxy Statement 2/10/05 Work to Secure Regulatory Approvals (FERC, DOJ, ICC*, PA PUC, NJ BPU, and others) Develop Transition Implemen
Slide 24: EE&G Value Proposition
Unmatched scale and scope through merger Strong balance sheet and financial discipline Stable growth delivery business with improving operations Exceptional generation business uniquely positioned to benefit from: improving power market fundamentals increasing environmental restrictions on fossil fu
Slide 25: Appendix - Additional Information
Appendix - Additional Information
Slide 26: Expected EPS Drivers
Expected EPS Drivers Guidance: $3.00 - $3.30 Notes: For reconciliation to GAAP reported EPS, see 4Q 05 earnings release attachments within Exhibit 99 of Form 8-K filed 1/25/06. 2006 Adjusted (non-GAAP) Operating EPS - Stand-alone 2005A Weather Generating RNF Load Growth O&M Outages Amort. / Depr. In
Slide 27: Exelon's Balance Sheet is Strong
Exelon Consolidated: FFO / Interest 6.1x BBB 4.5x - 6.5x FFO / Debt 31% 30% - 45% Debt Ratio 51%(3) Generation: FFO / Interest 12.7x BBB+ 5.5x - 7.5x FFO / Debt 92% 40% - 55% Debt Ratio 31% ComEd: FFO / Interest 3.9x A- 3.5x - 4.2x FFO / Debt 18% 20% - 28% Debt Ratio 37%(3) PECO: FFO / Interest 5.8x
Slide 28: Illinois Regulatory/Legislative Timeline
Illinois Regulatory/Legislative Timeline Dec.2004 22505 1216S 24/06 Sept. 2008, ost 2006 Final Procurement FERC ICC voles inital IcCStaffReport case filed confirms 5. for auction to supported auction moots. reverse take place auction process Its principles auction ; “ january 1, bundled Distribution
Slide 29: ComEd Energy Procurement Plan
33% of load 33% of load 33% of load 3 yrs. + 5 mos. 3 yrs. 3 yrs. 3 yrs. 2 yrs. + 5 mos. 3 yrs. 3 yrs. 3 yrs. 17 mos. 3 yrs. 3 yrs. 3 yrs. 3 yrs. >> 3 yrs.>> Calendar Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 PJM Planning Year (June 1- May 31) 2008 2009 2010 2011 2012 2013 201
Slide 30: Exelon Power Performance - Reliability
Targeted capital investment and sound operating fundamentals driving fleet efficiency and reliability Market-driven investments in plant improvements that increase unit profitability Material condition improvement resulting in improved unit reliability, heat rate and capacity Capitalizing on market
Slide 31: Nuclear Performance - Production
Nuclear Performance - Production Sustained nuclear production reliability Continued growth in generation output Consistently high capacity factors Continued excellence in refueling outage performance Exelon Nuclear's sustained reliability is a competitive advantage Data sources: Nucleonics Week, Ele
Slide 32: Nuclear Performance - Cost
Exelon capitalizes on its nuclear cost advantage Consistent improvement in production cost Industry leader in production cost by a substantial margin The size and scale of the fleet enables low-cost generation Exelon's low-cost nuclear generation is a competitive advantage Data source: Electric Util
Slide 33: Nuclear Performance - Fuel Costs
2004 2005 2006 2007 2008 2009 2010 Contracted 10700 8991 6923 8456 7342 3629 2520 Flexibilities 1810 3517 1707 1571 186 70 Demand 8437 11587 8472 10027 7528 9196 7393 Uranium market prices have increased, but Exelon is managing its portfolio Reduced uranium consumption by 25% Contracting strategy pr
Slide 34: PSEG/Nuclear Operating Services Agreement
PSEG/Nuclear Operating Services Agreement Nuclear Operating Services Agreement with Salem/Hope Creek is meeting or exceeding expectations Strong production performance Combined site capacity factor of 89.1% for 2005 Highest combined site generation ever Two strong refueling outages with major materi
Slide 35: GAAP EPS Reconciliation 2000-2002
GAAP EPS Reconciliation 2000-2002
Slide 36: GAAP EPS Reconciliation 2003-2005
Reconciliation of GAAP Reported and Adjusted (non-GAAP) Operating Earnings per Diluted Share GAAP EPS Reconciliation 2003-2005
Slide 37: 2006 Exelon Earnings Guidance
2006 Exelon Earnings Guidance The outlook for 2006 adjusted (non-GAAP) operating earnings is Exelon stand-alone and excludes unrealized mark-to-market adjustments from non-trading activities, income resulting from investments in synthetic fuel-producing facilities, significant impairments of intangi
Slide 38: Attractive Pricing Environment
Attractive Pricing Environment PJM Western Hub (RTC) Forward Prices and NYMEX Natural Gas (Henry Hub) BGS Auction Result: NJ Avg -Approx ($/MWh ) $33 - $34 $36 - $37 $44 - $46 $67 - $70 PJM West RTC ($/MWh) NYMEX - Henry Hub ($/MBTU) $55 $55 $66 $102 $5.15 - $5.35 $5.25 - $5.40 $6.50 - $6.65 $9.50 -
Slide 39: BGS and Long-Term Contracts
BGS and Long-Term Contracts 'PSEG Power Term Contracts Hi enetaon output nt ue * met $<" ‘oH ‘© PSEG
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